EVIAN, France — How to best develop a long-term business in the increasingly short-term beauty world? A panel discussion, led by Groupe Clarins’ chief executive officer, Christian Courtin, tackled the issue.
“Our challenge today is really to protect our brand,” explained Courtin. “A product can always be copied by competition, but a brand is unique.”
He pointed to the example of Madonna as “one of the best brands,” since over the years she’s evolved, yet always stood for the same “dream.”
The customer is key to supporting a brand, said Courtin. “I think we have to work a little bit more on the intangibles,” he said. “I mean, how much do we spend on the consumer’s brand perception, on the modernity of our brand, on customer service? Because they’re buying a brand, and through the brand they are buying a product.”
Dialog with the customer is key, agreed Marcia Kilgore, founder and executive director of Blissworld, who said that when she began her firm six years ago, Bliss had no new products with which to lure consumers. “What we offered was a new type of service, a new way of talking to the customer,” she said.
Case in point: She staved off bad publicity regarding a mouse sighting in her spa by sending letters to 10,000 customers explaining the uninvited guest. The missive met with rave reviews.
“Customers do not buy low molecular weight poly-saccharide fused onto marine collagen-sourced waters,” she maintained.
Kilgore said maintaining the core consumer is key: “I think each of our brands has to remember exactly what we are. We can’t dilute our brand and try to include everyone, because you can’t please all people all of the time.”
Parfums Christian Dior’s Claude Martinez confirmed it’s a prime moment to focus on brands. “I think the time we are facing now is a formidable opportunity for us to discover or rediscover the concept of branding,” he said. “At Dior, we believe that without these four letters, D-i-o-r, we are nothing.”
Martinez considers Dior a growth engine as long as it continues creating and remains a preference among consumers. This, he said, is to be obtained through perpetual innovation — not “me-too, smell-alike, look-alike” products.
“At Dior, we want to innovate with stronger ideas at a pace that will allow the brand to grow at twice the market rate, but with fewer ideas, fewer initiatives and fewer products,” he said.
“Of course, the long term is key to defining and facilitating the short-term activities,” explained Martinez. “But without the short-term successes, there is no long term.”
Pascale Weil, managing partner of Publicis Consultants, also examined short- versus long-term strategies for the luxury goods industry.
According to Publicis research, keys to success include: a brand being rooted in its own identity; that it identifies its unique vision, and that it sets its own rules. Weil said it is also important that a brand remains perpetually creative.
“I would recommend alternating brand and product communication,” she said, adding the former is for the company to stand out, while the latter is to “constantly nurture the brand.”
Nurturing can also help stocks. Jacques-Franck Dossin, executive director of equity research, luxury goods and cosmetics at Goldman Sachs International, explained some of what the financial community looks for when investing in beauty firms.
Particularly with mature companies, “overall, what they want is predictability. Now, on top of that, if you can offer growth — fantastic,” he said. “But I would say that is the cherry on top of the cake in most investors’ minds.”
Opportunism should be avoided, he said. That’s because if a company comes out with unexpectedly strong positive earnings, “the market is likely to price your stock slightly upwards,” he said. “If, on the other hand, you have a bad earnings surprise, the market is very likely to price your stock sharply downwards.”
Dossin said that specific activities also affect pricing. “I think the view among the financial community is that fragrance — for example — is less predictable a product range than makeup, which itself is less predictable than skin care or hair care, and I think one of the explanations for different rankings or ratings you see in the industry is the product mix.””